Affiliate Marketing, It’s Pros and Cons

Four years after the Internet was born, an online company called CDNOW started the online transaction called “BuyWeb”. Purchases are done by clicking the item on their website, that you are interested with. Also, it functions independently from a storefront.

This was the first profitable form of affiliate marketing, and many other online and e-commerce sites soon followed suite with similar programs (Amazon.com being an example.) Affiliate Marketing has now become a consistent method of advertising and selling, and now forms a large part of many company’s marketing strategies. It is cheap, effective, and has little to no risk for all involved.

Commonly, affiliate marketing functions on cost-per-click or CPC systems, wherein the affiliate earns for every redirected visitor to the merchant’s website. The readers are sent to the merchant by clicking a link or an advertisement posted on the affiliate’s site. This kind of system is very vulnerable to fraud, which is very disadvantageous for the merchants. There are a lot of fraudster who take advantage of this system through the following tactics: spamming, making false ads or bait (that are not even related to the product), formulating ad-ware, utilizing forced click system, Search Engine Optimization or SEO “keyword stuffing”, tracking cookies and other similar techniques. This cost-per-click scheme was not as popular as it once was.

Merchants are more inclined to use Cost-Per-Action / CPA or Cost-Per-Sale / CPS systems. These two are quite similar in terms of the methods they use. Affiliates receive revenue share or commission when a visitor subscribes or avails of the merchant’s products and services.

Let say, you are my merchant and I am affiliated with you. I will be blogging about your products and services, and I will also post a link or ad that would redirect my interested visitors to your site. If that visitor who was redirected to your site bought a product from you, I shall receive a commission or a share from your revenue.

The CPA and CPS schemes are almost free from risk. Thus, both merchants and affiliates use these systems. Today, CPS is made better by Google due to its Latent Semantic Indexing. This program can automatically detect website that are nonsensical in content, that has keyword stuffing , or advertising sites that are not comparison.

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